ayrshire 2010 accounts - ayrshire housing · ayrshire’s leading housing associations with a stock...

AYRSHIRE HOUSING

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST MARCH, 2010

INDEX

Page

1. Operating and Financial Review

7. Advisors and Registered Office

8 - 10. Report of the Trustees

11. Trustees Statement on the Company’s

System of Internal Financial Control

12. Report of the Auditors on the Trustees

Statement on the Company’s System of

Internal Financial Control

13. Report of the Independent Auditors

14. Income and Expenditure Account

15. Statement of Total Recognised Gains and Losses

Note of Historical Surpluses and Deficits

16. Balance Sheet

17. Cash Flow Statement

18. Notes to the Cash Flow Statement

19 - 30. Notes to the Financial Statements

AYRSHIRE HOUSING

OPERATING AND FINANCIAL REVIEW


Background

Activities

Ayrshire Housing Group consists of Ayrshire Housing (parent) a registered social landlord with charitable status and Ayrshire

Homestake Limited, our one subsidiary company retained as a vehicle to pursue potentially non-charitable activities. The

subsidiary company has not yet traded.

The Group Head Office is in Ayr and Ayrshire Housing has properties throughout Ayrshire. Ayrshire Housing is now one of

Ayrshire’s leading housing associations with a stock of over 1,400 houses and an active development programme

predominantly but not exclusively in South Ayrshire.

Mission Statement

We aim to enhance the well being of our tenants and the wider communities of Ayrshire through high quality housing and

related services.

We aim to do this by:

• Increasing the supply of high quality affordable housing.

• Creating and maintaining attractive neighbourhoods that provide a positive

environment for residents to live in – now and in the future.

• Supporting socially useful economic activity and regeneration strategies

beyond our immediate tenant base through work with the voluntary sector and others agencies.

• Constantly demonstrating that our services surpass the needs and aspirations of their users.

• Supporting tenants and other service users to lead independent and fulfilling lives.

• Ensuring that our properties are maintained to the highest standards over the long-term.

• Demonstrating quality and genuine value for money in all that we do.

• Engaging with our service users, the wider community and key partners to give them a real stake in the development

of the Ayrshire Housing group.

Our Corporate Plan, reviewed by the Board annually, sets out how we will work to deliver the Mission Statement by analysing

the external environment; identifying key objectives at an operational level; setting performance indicators and setting strategy

for the association’s promotion and engagement with stakeholders. The corporate plan also provides for the review and further

development of the thirty year financial plan; the annual budget and the agreed work plan of the Director.

External Influences

Four main issues came to the fore in the previous year which continue to impact and influence our business:

• The impact of restrictions on the Scottish Government’s budget for affordable housing as it affects Ayrshire

Housing’s area of operation. This uncertainty is compounded by the forthcoming Comprehensive Spending Review

(CSR).

• The collapse of private house building and with it real uncertainty regarding the bringing forward of Section 75 sites.

• The continuing uncertainty regarding the outcome of the Government’s Investing in Affordable Housing consultation

and the recently launched discussion document Housing: Fresh Thinking, New Ideas.

• The further strengthening of the role of the Councils in the planning and delivery of affordable housing investment.

/Cont…

Page 1

AYRSHIRE HOUSING



External Influences/Cont…

For the foreseeable future, the main focus for housing development as opposed to wider activities is likely to be the South

Ayrshire Council area. The investment context is provided by that Council’s Local Housing Strategy (LHS) and Strategic

Housing Investment Plan (SHIP). Whilst there is a demand for affordable housing in all areas, these documents suggest

prioritising investment towards areas of highest demand, for example Ayr and Prestwick linked increasingly to access to

Section 75 sites. The current problems in the private housebuilding industry point towards a much more pragmatic and

outcome focused approach to investment planning, in particular in terms of the programming of locations with different

housing needs prioritisation.

Ayrshire Housing is therefore fortunate with its local knowledge and commitment that it can respond with speed and flexibility

to shifts in site availability. On the other hand, the association faces competition from national and regional associations for

what are limited grant budgets.

Increasingly, Ayrshire Housing’s development activity is likely to be complemented by South Ayrshire Council’s return to

housebuilding. This provides a clear spur to joint working to maximise local investment opportunities and to maximise the

effective delivery of new housing. An early example of such co-operation is our appointment as project manager for South

Ayrshire Council’s first new housing development.

Key Business Issues

Maintaining Independence

Ayrshire Housing is committed to maintaining its independence. It is tenant and community led with a clear area of operation

and is well regarded, both nationally and locally.

Ayrshire Housing will however seek to form new relationships with local authorities and other housing associations where

these are appropriate to realise mutually beneficial objectives. It has already established with the other Ayrshire associations

fora to discuss responses to the Government’s procurement proposals and to lobby on issues of common concern. Ayrshire

Housing will also seek collaborative arrangements with local authorities that decide to resume house building. In this regard,

the further strengthening of the partnership with South Ayrshire Council will be a key focus for the Board and the Director.

Housing Association Grant Funded Development

Maintaining a programme of new building remains important to Ayrshire Housing. We will focus, therefore, on identifying

new opportunities, cementing key relationships and finding creative ways to meet Government efficiency demands without

compromising our obligations to tenants.

The likely absence of significant new funding from the Government over the coming period is a major challenge. We await for

example the outcome of the Scottish Government’s CSR scheduled for the end of 2010. In the interim, we will focus on

developing innovative funding packages with key partners, e.g. South Ayrshire Council and house builders, to endeavour to

maintain some momentum.

We will seek to augment traditional development activity with acquisitions through the Mortgage to Rent scheme. This is

proving to be a useful vehicle for steady stock growth as well as bringing real social benefits to individual households.

Financial Capacity

Ayrshire Housing is presently financially strong with a solid asset base, and a fundable stock maintenance and improvement

plan. The challenge over the coming period will be to utilise this strength to support continued business development. At the

same time, the Board will need to establish robust financial checks to ensure that it can weigh the benefits of continued growth

against any negative effects on rent levels, service standards and long-term viability.

Diversification

Diversification into new areas of activity will continue to be pursued which support our Mission Statement. Such activities will

also help to foster new collaborations with key partners and project the geographic impact of Ayrshire Housing. Working with

other parties, this will focus on regeneration, training, and support services to individuals. However, the general prospects for

these areas of activity are likely to be modest in the short term.

/Cont…

Page 2

AYRSHIRE HOUSING



Tenant Engagement

As it meets future challenges, Ayrshire Housing will continue to ensure that its obligations to potential and existing tenants are

to the fore. New forms of engagement with our tenants and applicants will be needed to support Board consideration of

business developments which will have an impact on rent levels, service standards or access to housing.

Performance Management

At each meeting, Ayrshire Housing’s Board receives reports underpinned where appropriate by key performance indicators

(KPIs) around the following activity areas to demonstrate progress in delivering the above corporate objectives:

Housing Management

Property Maintenance

Development Activity

Wider Action Activity

Financial Matters

Marketing and Public Relations

General Operational Matters

Key Performance Indicators

Complementing the narrative reports and where applicable, critical activities are measured against the following key

performance indicators (KPIs). Generally, these are consistent with those set out in previous Internal Management and

Corporate Plans following comparison with national benchmarks where these were available. In all relevant cases,

performance is intended to exceed that of the median housing association in Scotland. The targets are also reviewed against

actual prior year performance.

Housing Management 2009/10 Target 2009/10 Actual

Current non-technical arrears 1.1% of total gross rent 0.96%

Long-term arrears No more than 3.5% of tenants

over 13 weeks in arrears and

owing over £250

2.38%

Former tenant non-technical

arrears

No more than 1.8% of total rent

due

0.82%

Void rent loss No more than 0.8% of total rent

due

0.70%

Housing application processing Within 10 days 7 days

Property Management 2009/10 Target 2009/10 Actual

Emergency repairs performance 99% attendance within 4 hours 99%

Other repairs 96% completed on time 94%

Gas safety certificates 100% compliance aimed for and

never below external benchmark

of 93%

100%

Satisfaction with repairs service At least 70% satisfied 96%

Development Activity 2009/10 Target 2009/10 Actual

Stock growth target 168 subject to Government

support

170

Pipeline Minimum of 50 plots 37

Energy efficiency Minimum of SAP (2007) of 85 100%

Brownfield development At least 40% of units 2008-2011 19% 2008-2011

Building elements rated at “A” per

BRE Green Guide to Housing

Specification

100% 100%

/Cont…

Page 3

AYRSHIRE HOUSING



Key Performance Indicators/Cont…

Financial Matters 2009/10 Target 2009/10 Actual

Staff costs Less than 21% of turnover 20.1%

Administration cost/tenancy Less than £660 per tenancy £622

Liquidity – current assets:current

liabilities (adjusted for development

overdrafts)

1.10:1 4.96:1

Liquidity – cash:current liabilities

(adjusted for development

overdrafts)

1:1 4.06:1

Interest cover – operating

surplus;interest payable (adjusted

for depreciation)

1.52:1 3.96:1

Debt per unit Maximum of £20,000 ( as

adjusted to reflect new HAG

assumptions)

£20,384

General Operational Matters 2009/10 Target 2009/10 Actual

Board meetings quorate per session

(AGM to AGM)

100% 100%

Board attendance per session Average of 75% 68%

Performance in the year ended 31 March 2010

Turnover

Turnover has increased by £418,645 to £4,425,396 reflecting the increase in stock numbers and the annual rent increase. Rents

accounted for almost 100% of our turnover with a very small percentage (0.4%) relating to recoveries made from owners for

landscape maintenance.

Operating Costs

Operating costs represent 53% of turnover which is 1% lower than the previous year.

The trends in both the above since the formation of Ayrshire Housing in 2003 is illustrated below:

Page 4

£-

£1,000,000

£2,000,000

£3,000,000

£4,000,000

£5,000,000

2003 2004 2005 2006 2007 2008 2009 2010

Ayrshire Housing - Turnover and

Operating Costs

Turnover

Operating Costs

AYRSHIRE HOUSING



The growth in turnover can be further illustrated against operating surplus and interest payable for the seven years since the

formation of Ayrshire Homes.

Operating Costs/Cont…

Interest

Sterling base rates remained low in the year to 31 March 2010 and this had a positive effect on the variable rate loans within

our portfolio. For our development programme we minimised our borrowing requirements as far as possible by utilising

surplus cash holdings prior to drawing on agreed facilities.

Surplus for the Year

Surplus on ordinary activities for the year was £1,431,967 compared to £868,679 for 2008/9. This exceeded budgeted

projections due largely to the reduction in interest payable on our variable rate based borrowings.

Reserves

Financial reserves, consisting of revenue reserves set aside to manage the general risks faced by the association and designated

reserves set aside to contribute to the funding of future major repairs, stood at £7.5M. This represents an increase of 21% over

the same reserves at 31 March 2009.

Cash flow

Positive cash flows of £7M were generated from our operating activities. Interest payable was £638K offset slightly by

interest receivable of £7K. We used cash holdings to minimise interest costs for some project expenditure prior to drawing on

their agreed facilities. We spent almost £9M on our capital programme which was funded by grants and private finance. We

also repaid capital of £657K on our housing loans as per the individual loan agreements.

Capital Structure and Treasury Policy

Borrowings at the year end were £25M million. This debt is borrowed wholly from banks and building societies in the UK.

The Board recognises that the association’s level of debt makes it important to consider its treasury policy. The treasury

function operates within a framework of clearly defined Board approved policies, procedures and delegated authorities. The

association borrows on a conventional basis with loans typically repayable over 30 years. These loans are secured over the

properties being financed.

Page 5

£-£500,000

£1,000,000 £1,500,000 £2,000,000 £2,500,000 £3,000,000 £3,500,000 £4,000,000 £4,500,000 £5,000,000

2003 2004 2005 2006 2007 2008 2009 2010

Year

Ayrshire Housing - Turnover, Surplus and Interest Charges

Turnover

Operating Surplus

Interest Payable

Total Costs


FOR THE YEAR ENDED 31ST

Maturity profile: the following table provides an analysis of when the debt falls due for repayment.

Between one and two years

Between three and five years

In five years or more

Total

Capital Structure and Treasury Policy/Cont…

A graphical representation of our Loan to Value can be found in the graph below:

Future Prospects:

The association’s financial position is sound and a trend of improvement in its financial and

maintained over many years. We comply with all of our lenders covenants which, based on our financial projections, will

continue into the future.

We will continue to manage our finances in a prudent manner and will also d

private owners.

We will achieve this by:

• Setting rents at levels which are affordable to our tenants;

• Providing a quality service and

• Tight cost control.

We have a well motivated and competent workforce of

of the Federation of Employers in Voluntary Housing which provides us with support in managing and developing our staff to

foster a culture of continuous improvement.

The association is following a number of strategies which we expect will contribute and inform the above actions.

The association continues to invest in housing through its development and refurbishment programme. However, new build

opportunities may be lost through the reduced amount of grant assistance currently available from government. We will look

towards innovative approaches in generating finance to allow much needed new houses to be delivered.

Our major repair programme remains a key element of our strategy to

financial projections demonstrate that we will be able to meet our obligations under the Scottish Housing Quality Standards.

We are aware of the possible impact that a continued

closely with all our tenants identifying issues as early as possible to ensure that the tenant is aware of the different type

assistance available to them. In this way it is hoped to minimise rent arre

with rent arrears.

£-

£10,000

£20,000

£30,000

2003 2004 2005

Ayrshire Housing

Comparison

AYRSHIRE HOUSING



Maturity profile: the following table provides an analysis of when the debt falls due for repayment.

£ 1,724,235

£ 1,785,684

£21,440,000

£24,949,919

/Cont…

A graphical representation of our Loan to Value can be found in the graph below:

The association’s financial position is sound and a trend of improvement in its financial and operational performance has been


We will continue to manage our finances in a prudent manner and will also deliver value for money to our tenants and other

Setting rents at levels which are affordable to our tenants;

We have a well motivated and competent workforce of over 20 employees with a relatively low turnover. We are full members


s following a number of strategies which we expect will contribute and inform the above actions.


reduced amount of grant assistance currently available from government. We will look

towards innovative approaches in generating finance to allow much needed new houses to be delivered.

Our major repair programme remains a key element of our strategy to provide good quality homes for all of our tenants. Our


continued economic recession may have on our tenants. Our housing officers work

closely with all our tenants identifying issues as early as possible to ensure that the tenant is aware of the different type

assistance available to them. In this way it is hoped to minimise rent arrears and bad debt write off and other costs associated

Page 6

2005 2006 2007 2008 2009 2010Year

Ayrshire Housing - Value to Debt

ComparisonValue per House

Debt per House

operational performance has been


eliver value for money to our tenants and other

over 20 employees with a relatively low turnover. We are full members


s following a number of strategies which we expect will contribute and inform the above actions.


reduced amount of grant assistance currently available from government. We will look

provide good quality homes for all of our tenants. Our


y have on our tenants. Our housing officers work

closely with all our tenants identifying issues as early as possible to ensure that the tenant is aware of the different types of

ars and bad debt write off and other costs associated

AYRSHIRE HOUSING

ADVISORS AND REGISTERED OFFICE


Auditors

Armstrongs, Chartered Accountants

142 West Nile Street

Glasgow, G1 2RQ

Bankers

The Royal Bank of Scotland plc

Corporate Banking

139 St Vincent Street

Glasgow, G2 5JF

Legal advisors

HBJ Gateley Wareing

19 Canning Street

Edinburgh, EH3 8EU

Drummond Miller

65 Bath Street

Glasgow, G2 2DD

Registered Office

119 Main Street

Ayr, KA8 8BX

Registration Particulars

Communities Scotland Registration Number : 304

Scottish Charity Number : SC027906

Page 7

AYRSHIRE HOUSING

REPORT OF THE TRUSTEES


The Trustees present their report and the audited financial statements for the year ended 31st March, 2010.

Principal Activities

Ayrshire Housing is a company limited by guarantee and is governed by its Memorandum and Articles of Association.

Accordingly the Company has no share capital. It is a registered charity and is registered with the Housing Regulator as a

Registered Social Landlord. The Company’s principle activities are the provision, construction, improvement and

management of rented and shared ownership accommodation.

Review of the Year

The financial results for the year are set out in the income and expenditure account. The surplus for the year is £1,431,967

(2009 - £868,679) and this will be transferred to our reserves as part of our overall risk management strategy. In addition, a

transfer of £225,000 (2009 - £Nil) was made to a Designated Major Repair Reserve. During the year 170 new homes for rent

were brought into management via our continuing development programme and our involvement with the national Mortgage to

Rent Scheme.

Changes in Fixed Assets

Details of changes in fixed assets are set out in Notes 12-13.

The Trustees and Executive Officer

The Trustees and Executive Officer of the Company are as follows:-

Executive Officer

. J. Whiston

Trustees

. P. Torrance (Chairperson) . J. Mitchell

P. Boyd (Vice Chairperson) . R. Smith

. G. McDines . R. Leith (Appointed 23.09.09)

. Cllr J. McDowall . A. MacLeod (Resigned 23.09.09)

. J. Scott . A. Shilliday (Resigned 17.06.09)

. L. Allison

. A. Cassidy

. Cllr W. Grant

. Cllr M. Low

. M. Imrie

Page 8

AYRSHIRE HOUSING


FOR THE YEAR ENDED 31ST MARCH, 2010/Cont...

Insurance The Company has purchased insurance against liabilities in relation to the Company arising from the actions of Trustees and

other officers of the Company.

Statement of Trustees' Responsibilities Housing Association legislation requires the Trustees to prepare financial statements for each financial year which gave a true

and fair view of the state of affairs of the Company and of the income and expenditure of the Company for the year ended on

that date. In preparing these financial statements, the Trustees are required to:-

. select suitable accounting policies and then apply them consistently;

. make judgements and estimates that are reasonable and prudent;

. state whether applicable accounting standards have been followed subject to any material departures disclosed and

explained in the financial statements;

. prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will

continue in business;

. prepare a statement on internal financial control.

Key procedures that have been established, and are designed to provide effective internal financial control, are:-

Control environment – the Company has an organisational structure with clearly defined lines of responsibility, job

descriptions and delegation of authority. These are set out in accordance with the Company’s Standing Orders and Policy and

Procedure Manuals. The Company has complied with the Scottish Housing Regulator Code of Audit Practice (SHGN 97/06).

Information systems – the Company has a comprehensive system of financial reporting. The annual budget and thirty year

projections are approved by the Trustees. Quarterly actual results are reported against budget and any significant adverse

variances are examined by management and remedial action taken. There are quarterly and thirty year cashflow projections

and revised budget forecasts are considered as at 30th

September each year.

Control procedures – policies and procedures are maintained for all areas of operations. In particular, there are clearly

defined policies for development projects and capital expenditure. Large or unusual capital expenditure projects require

Trustees’ approval.

The Trustees are responsible for keeping proper accounting records which disclose, with reasonable accuracy at any time, the

financial position of the Company and to enable it to ensure that the financial statements comply with the requirements of the

Industrial and Provident Societies Acts 1965-2002, the Housing (Scotland) Act 2001 and the Registered Social Landlords

(Accounting Requirements) (Scotland) Order 2007. It is also responsible for safeguarding the assets of the Trust and for taking

reasonable steps for the prevention and detection of fraud and other irregularities.

Corporate Governance The Company has complied throughout the accounting period with the Code of Best Practice published by the Cadbury

Trustees in 1992 on the Financial Aspects of Corporate Governance.

In accordance with the requirements of the Scottish Housing Regulator, the auditors have confirmed that they consider this

statement appropriately reflects the Company’s compliance with those paragraphs of the Code of Best Practice required to be

revised by them. The auditors have also confirmed that, in their opinion, with regard to the Trustees’ Statement on Internal

Financial Control on page five the Trustees have provided the disclosures required by Paragraph 4.5 of the Code of Best

Practice as supplemented by the related guidance for Trustees and such a statement is not inconsistent with the information of

which they are aware from their audit work on the financial statements.

Page 9

AYRSHIRE HOUSING



Statement as to Disclosure of Information to Auditors So far as the Trustees are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006)

of which the Company’s auditors are unaware, and each Trustee has taken all the steps that he or she ought to have taken as a

Trustee in order to make himself or herself aware of any relevant audit information and to establish the the Company’s auditors

are aware of that information.

Auditors A resolution to appoint the auditors, Messrs. Armstrongs, will be proposed at the Annual General Meeting.

By order of the Board

Secretary

Dated :

Page 10

AYRSHIRE HOUSING

TRUSTEES STATEMENT ON THE COMPANY’S

SYSTEM OF INTERNAL FINANCIAL CONTROL


The Trustees acknowledge their ultimate responsibility for ensuring that the Company has in place a system of controls that is

appropriate to the various business environments in which it operates. These controls are designed to give reasonable

assurance with respect to:

. The reliability of financial information used within the Company or for publication;

. The maintenance of proper accounting records;

. The safeguarding of assets (against unauthorised use or disposition).

It is the Trustees’ responsibility to establish and maintain systems of internal financial control. Such systems can only provide

reasonable and not absolute assurance against material financial misstatement or loss. Key elements include ensuring that:

. Formal policies and procedures are in place, including the documentation of key systems and rules relating to the

delegation of authorities, which allow the monitoring of controls and restrict the unauthorised use of the Company’s

assets;

. Experienced and suitably qualified staff take responsibility for important business functions. Annual appraisal

procedures have been established to maintain standards of performance;

. Forecasts and budgets are prepared regularly which allow the Trustees and staff to monitor the key business risks and

financial objectives, and progress towards financial plans set for the year and the medium term;

. Regular management accounts are prepared promptly, providing relevant, reliable and up-to-date financial and other

information and significant variances from budgets are investigated as appropriate;

. All significant new initiatives, major commitments and investment projects are subject to formal authorisation

procedures, through relevant sub-committees comprising Trustee members and others;

. The Trustees review reports from management, from directors, staff and from the external and internal auditors to

provide reasonable assurance that control procedures are in place and are being followed. This includes a general

review of the major risks facing the Company;

. Formal procedures have been established for instituting appropriate action to correct weaknesses identified from the

above reports.

The Trustees have reviewed the effectiveness of the system of internal financial control in existence in the Company for the

year ended 31st March 2010 and until the below date. No weaknesses were found in internal financial controls, which resulted

in material losses, contingencies, or uncertainties, which require disclosure in the financial statements or in the Auditor’s

Report on the financial statements.

By order of the Board

Secretary

Dated :

Page 11

AYRSHIRE HOUSING

REPORT OF THE AUDITORS ON THE TRUSTEES

STATEMENT ON THE COMPANY’S SYSTEM OF INTERNAL FINANCIAL CONTROL


Corporate Governance

In addition to our audit of the financial statements, we have reviewed the Trustees’ statement concerning the Company’s

compliance with the information required by the section on internal financial control within SFHA’s publication “Raising

Standards in Housing”.

Basis of Opinion

We carried out our review having regard to the Bulletin “Disclosures Relating to Corporate Governance” issued by the

Auditing Practices Board. The Bulletin does not require us to review the effectiveness of the Company’s procedures for

ensuring compliance with the Guidance Notes, nor to investigate the appropriateness of the reasons given for non-compliance.

Opinion

In our opinion the statement on internal financial control on page three has provided the disclosures required by the section on

internal financial control within SFHA’s publication “Raising Standards in Housing” and is consistent with the information

which came to our attention as a result of our audit work on the financial statements.

Through enquiry of certain Trustee members, directors and officers of the Company, and examination of relevant documents,

we have satisfied ourselves that the Trustees’ Statement on Internal Financial Control appropriately reflects the Company’s

compliance with the information required by the section on internal financial control within SFHA’s publication “Raising

Standards in Housing”.

Armstrongs,

Statutory Auditor,

Chartered Accountants,

Victoria Chambers,

142, West Nile Street,

Glasgow.

G1 2RQ.

Dated :

Page 12

REPORT OF THE INDEPENDENT AUDITORS TO

THE MEMBERS OF AYRSHIRE HOUSING

We have audited the financial statements of Ayrshire Housing for the year ended 31st March 2010 which comprise the Income

and Expenditure Account, the Balance Sheet, the Cash Flow Statement and the related notes. These financial statements have

been prepared under the historical cost convention and the accounting policies set out therein.

This report is made solely to the Company’s members, as a body, in accordance with Industrial and Provident Societies Act

1965. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to

state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or

assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this

report, or for the opinions we have formed.

Respective responsibilities of trustees and auditors The Trustees’ responsibilities for preparing the financial statements in accordance with applicable law and United Kingdom

Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the statement of Trustees’

responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and

International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in

accordance with the relevant legislation. We also report to you if, in our opinion, a satisfactory system of control over

transactions has not been maintained if the Company has not kept proper accounting records, or if we have not received all the

information and explanation we require for our audit, or if information specified by law regarding director’s renumeration and

other transactions is not disclosed.

We read the information contained in the Report of the Trustees and consider whether it is consistent with the audited financial

statements. We consider the implications for our report if we become aware of any apparent misstatements or material

inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

Basis of Opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing

Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the

financial statements. It also includes an assessment of the significant estimates and judgements made by the Trustees in the

preparation of the financial statements, and of whether the accounting policies are appropriate to the Company's circumstances,

consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in

order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material

misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall

adequacy of the presentation of information in the financial statements.

Opinion In our opinion the financial statements:

- give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice of the state of

the Company’s affairs as at 31st March 2010 and of its surplus for the year then ended;

- have been properly prepared in accordance with the Industrial and Provident Societies Acts 1965 to 2002, Schedule 1,

the Housing (Scotland) Act 2001 and the Registered Social Landlords (Accounting Requirements) (Scotland) Order

2007;

And

- the information given in the Report of the Trustees is consistent with the financial statements.

Armstrongs,

Statutory Auditor,

Chartered Accountants,

Victoria Chambers,

142, West Nile Street,

Glasgow.

G1 2RQ.

Dated :

Page 13

AYRSHIRE HOUSING

INCOME AND EXPENDITURE ACCOUNT


2010 2009

Notes £ £

Turnover 2 4,425,396 4,006,751

Operating Costs 2 ( 2,361,711 ) ( 2,167,347 )

Operating Surplus 2 2,063,685 1,839,404

Gain on Disposal of Housing Property 5 - 99,496

Interest Receivable and Other Income 8 6,735 73,920

Interest Payable and Similar Charges 9 ( 638,453 ) ( 1,144,141 )

Surplus for the year 1,431,967 868,679

The results for the year relate wholly to continuing activities.

Page 14

AYRSHIRE HOUSING

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES


2010 2009

£ £

Surplus/(Deficit) for the year 1,431,967 868,679

Acturial loss on pension scheme ( 328,000) ( 23,000)

Unrealised Surplus/(Deficit) on Revaluation of Properties 457,858 -

Total recognised gains and losses relating to the year 1,561,825 845,679

AYRSHIRE HOUSING

NOTE OF HISTORICAL SURPLUSES AND DEFICITS

FOR THE YEAR ENDED 31ST MARCH 2010

2010 2009

£ £

Reported surplus/(deficit) on ordinary activities before taxation 1,561,825 845,679

Difference between historical cost depreciation and the actual charge for the

year calculated on the revalued amount 47,282 37,725

Realisation of property revaluation gains of previous years - 16,678

Historical cost surplus/(deficit) on ordinary activities 1,609,107 900,082

Historical cost surplus/(deficit) on ordinary activities 1,609,107 900,082

Page 15

AYRSHIRE HOUSING

BALANCE SHEET

AS AT 31ST MARCH, 2010

2010 2009

Notes £ £

Tangible Fixed Assets

Housing Properties (net of depreciation) 12 39,071,412 33,227,011

Other 13 276,514 290,477

39,347,926 33,517,488

Current Assets

Investments 14 1 1

Debtors 15 910,654 4,014,435

Cash at Bank and in Hand 4,116,193 2,460,499

5,026,848 6,474,935

Creditors : amounts falling due within one year 16 5,983,421 4,591,797

Net Current Assets/(Liabilities) ( 956,573 ) 1,883,138

Total Assets less Current Liabilities 38,391,353 35,400,626

Creditors : amounts falling due after more than one year 17 ( 24,094,273 ) ( 22,993,371)

pension liability 20 ( 351,000 ) ( 23,000)

Net Assets 13,946,080 12,384,255

Capital and Reserves

Designated Reserve 18 625,000 400,000

Revaluation Reserves 19 6,580,936 6,170,360

Revenue Reserve 21 6,740,144 5,813,895

13,946,080 12,384,255

These financial statements were approved by the Trustees on and signed on their behalf by:

…………………………………………… Chairperson

………………………………………….. Trustee

…………………………………………. Secretary

Page 16

AYRSHIRE HOUSING

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31ST MARCH, 2010 2010 2009

£ £

Net Cash inflow from operating activities 2,483,879 2,637,612

Returns on investments and servicing of Finance

Interest Received 6,735 73,920

Interest Paid ( 638,453) ( 1,144,141)

( 631,718) ( 1,070,221)

Capital Expenditure and Financial Investment

Payments to acquire and develop housing properties ( 8,694,229) ( 11,919,436)

Payments to acquire other fixed assets ( 19,712) ( 18,254)

Grants Received 6,073,054 6,006,733

Proceeds of disposal of housing property - 170,991

( 2,640,887) ( 5,759,966)

Net cash inflow (outflow) before financing ( 788,726) ( 4,192,575)

Financing

Loans - Received 1,940,055 3,321,108

- Repaid ( 657,048) ( 562,243)

1,283,007 2,758,865

Increase/(Decrease) in cash 494,281 ( 1,433,710)

Reconciliation of net cash flow to movement in net debt

Increase/(Decrease) in cash in the year 494,281 ( 1,433,710)

Cash (inflow)/outflow from (increase)/decrease in loan finance ( 1,283,007) ( 2,758,865)

Decrease/(Increase) in net debt resulting from cash flow ( 788,726) ( 4,192,575)

Net debt at 01.04.09 ( 24,061,388) ( 19,868,813)

Net debt at 31.03.10 ( 24,850,114) ( 24,061,388)

Page 17

AYRSHIRE HOUSING

NOTES TO THE CASH FLOW STATEMENT

FOR THE YEAR ENDED 31ST MARCH, 2010 2010 2009

£ £

1. Reconciliation of surplus for the year to net

cashflow from operating activities

Operating Surplus 2,063,685 1,839,404

Depreciation 503,675 417,383

(Increase)/Decrease in Debtors ( 23,057) 392,937

Increase/(Decrease) in Creditors ( 61,424) ( 12,112)

2,483,879 2,637,612

2. Analysis of changes in net debt

2010

Cash

Flow

2009

£ £ £

Cash in hand and at bank 4,116,193 1,655,694 2,460,499

Development Overdraft ( 4,016,389) ( 1,161,413) ( 2,854,976)

Debt due within one Year ( 855,645) ( 182,105) ( 673,540)

Debt due after one Year ( 24,094,273) ( 1,100,902) ( 22,993,371)

( 24,850,114) ( 788,726) 24,061,388)

2009

Cash

Flow

2008

£ £ £

Cash in hand and at bank 2,460,499 161,441 2,299,058

Development Overdraft ( 2,854,976) ( 1,595,151) ( 1,259,825)

Debt due within one Year ( 673,540) 5,512 ( 679,052)

Debt due after one Year ( 22,993,371) ( 2,764,377) ( 20,228,994)

24,061,388) ( 4,192,575) ( 19,868,813)

Page 18

AYRSHIRE HOUSING

NOTES TO THE FINANCIAL STATEMENTS


1. Principal Accounting Policies

The Company is incorporated under the Industrial and Provident Societies Act 1965.

The financial statements have been prepared under the historical cost convention as modified by the revaluation of

housing properties and in compliance with the Registered Social Landlords (Accounting Requirements) (Scotland) Order

2007, the Statement of Recommended Practice (SORP) 2008 and applicable Accounting Standards. A summary of the

more important accounting policies is set out below.

Turnover

Turnover relates to the income from letting of properties at affordable rents, and the supply of feuing services, together

with revenue grants from the Scottish Housing Regulator, local authorities and other organisations.

Housing Properties

Housing Properties are stated at cost, less social housing and other public grants and less accumulated depreciation.

Depreciation is charged on a straight line basis over the expected economic useful lives of the properties at an annual rate

of 2%.

Improvements are capitalised where these result in an enhancement of the economic benefits of the property. Such

enhancement can occur if the improvements result in an increase in rental income, a material reduction in future

maintenance costs or a significant extension of the life of the property. Works to existing properties, which fail to meet

the above criteria, are charged to the Income and Expenditure Account.

Reviews for impairment of housing properties are carried out regularly and any impairment in an income-generating unit

is recognised by a charge to the Income and Expenditure Account. Impairment is recognised where the carrying value of

an income-generating unit exceeds the higher of its net realisable value or its value in use. Value in use represents the net

present value of expected future cash flows from these units. Impairment of assets would be recognised in the Income and

Expenditure Account.

Work to Existing Housing Properties

Expenditure on improvements to existing property, which adds to the value of the property or extends its useful life, is

capitalised as part of the cost of the property. All other maintenance expenditure is written off the income and expenditure

account in the year in which it is incurred.

Sale of Housing Properties

Properties are disposed of under the appropriate legislation and guidance. All costs and grants relating to the share of

property sold are removed from the financial statements at the date of sale, except for first tranche sales. Any grants

received that cannot be repaid from the proceeds of sale are abated and the grants removed from the financial statements.

The Statement of Recommended Practice 2008 states that the disposal of shared-ownership prioperties first tranche sales

be included in turnover at completion with the balance being classified as fixed assets. Due to the Company’s last shared-

ownership scheme being off-site in 2000 and records only being required to be held for six years, this exercise has not

been carried out.

Other Fixed Assets

Other fixed assets are stated at cost less accumulated depreciation. Depreciation is charged by equal instalments

commencing with the year of acquisition at rates estimated to write off costs less any residual value over the expected

economic useful lives at annual rates :-

Furniture and Fittings - 20% straight line

IT Systems - 20% straight line

Offices - 2% straight line

Let Properties - 20% straight line

/Cont…

Page 19

AYRSHIRE HOUSING



1. Principal Accounting Policies/Cont…

Social Housing Grant and Other Grants

Where developments have been financed wholly or partly by Social Housing Grant or other capital grant, the cost of those

developments have been reduced by the amount of the grant receivable. The amount of the grants receivable is shown

separately on the notes to the financial statements.

Social Housing Grant received in respect of revenue expenditure is credited to the Income and Expenditure Account in the

same period as the expenditure to which it relates.

Although Social Housing Grant is treated as a grant for accounting purposes, it may nevertheless become repayable in

certain circumstances, such as the disposal of certain assets. The amount repayable would be restricted to the net proceeds

of sale.

Pension Costs

The Organisation participates in the centralised SFHA defined benefit pension scheme and retirement benefits to

employees of the Organisation are funded by contributions from all participating employers and employees in the scheme.

Payments are made in accordance with periodic calculations by consulting actuaries and are based on pension costs

applicable across the various participating Members taken as a whole.

The expected costs to the Organisation of pension is charged to the income and expenditure accounts so as to spread the

cost of pensions over the service lives of employees.

The Organisation participates in the centralised Strathclyde Pensions Trust defined benefits pension scheme and retirement

benefits to employees of the Organisation are funded by the contributions from all participating employers and employees

in the scheme. Payments are made to the Trust in accordance with periodic calculations by consulting actuaries and are

based on pension costs applicable across the various participating employers taken as a whole.

The expected cost to the Organisation of pensions is charged to income so as to spread the cost of pensions over the

service lives of the employees in the scheme taken as a whole.

The Organisation has fully adopted accounting standard FRS17 ‘Retirement Benefits’ during the year. The impact of this

standard has been reflected throughout the financial statements. Prior year comparatives have been restated where

appropriate.

The difference between the fair value of the assets held in the Organisation’s defined benefit pension scheme and the

scheme’s liabilities measured on an actuarial basis using the projected unit method are recognised in the Organisation’s

balance sheet as a pension scheme liability.

Leases

Assets held under operating leases are not capitalised. The lease rentals are expensed to the income and expenditure

account in the year in which they are incurred.

Capitalisation of Interest

Interest incurred on the financing of a development is capitalised up to the date of completion of the scheme.

Page 20

AYRSHIRE HOUSING



2. Lettings and other related information

Particulars of turnover, operating costs and operating surplus by class of business

2010

Notes

Turnover

Operating

Costs

Operating

Surplus/

(Deficit)

£ £ £

Social Lettings 3 4,398,490 2,361,711 2,036,779

Other Activities 4 26,906 - 26,906

Total 4,425,396 2,361,711 2,063,685

2009

Notes

Turnover

Operating

Costs

Operating

Surplus/

(Deficit)

£ £ £

Social Lettings 3 3,979,387 2,167,347 1,812,040

Other Activities 4 27,364 - 27,364

Total 4,006,751 2,167,347 1,839,404

None of the income or expenditure from lettings related to special needs.

3. Particulars of Income and Expenditure from Lettings

General

Needs

Shared

Ownership

Total

2010

2009

£ £ £ £

Income from Lettings

Rent receivable net of identifiable service chrgs 4,184,796 39,604 4,224,400 3,816,584

Service charges receivable 204,665 - 204,665 184,908

Gross income from rents and service charges 4,389,461 39,604 4,429,065 4,001,492

Less: voids ( 30,575) - ( 30,575 ) ( 22,105)

Total turnover from social letting activities 4,358,886 39,604 4,398,490 3,979,387

Expenditure on Lettings

Management and maintenance admin costs 910,910 10,160 921,070 891.632

Reactive repairs and maintenance 626,425 - 626,425 576,748

Bad debts – rents and service charges 24,247 - 24,247 31,805

Planned and cyclical maint incl major repairs 319,969 - 319,969 292,162

Depreciation of social housing 463,232 6,768 470,000 375,000

Operating costs for social letting activities 2,344,783 16,928 2,361,711 2,167,347

Operating surplus for social lettings for 2010 2,014,103 22,676 2,036,779 1,812,040

Operating surplus for social lettings for 2009 1,783,576 28,464 1,812,040

The amount of service charges receivable on housing accommodation not eligible for housing benefit is £Nil.

Page 21

AYRSHIRE HOUSING



4. Particulars of Turnover, Operating Costs & Operating Surpluses or Deficits from Other Activities

Grants

from

Scottish

Ministers

Other

Revenue

Grants

Supportin

g People

Income

Other

Income

Total

Turnover

Operating

Costs-

Bad

Debt

Other

Operating

Costs

Operating

Surplus/

Deficit for

2010

Operating

Surplus/

Deficit for

2009

£ £ £ £ £ £ £ £ £ Wider Action Role

- - - - - - - - -

Care & Repair

- - - - - - - - -

Factoring

- - - 17,168 17,168 - - 17,168 17,946

Development Activities

- - - - - - - - -

Support Activities

- - - - - - - - -

Care Activities

- - - - - - - - -

Other Management Services

- - - - - - - - -

Aids & Adaptations

- - - - - - - - -

Other Activities

- - - - - - - - -

Commercial Rent

- - - 9,738 9,738 - - 9,738 9,418

Total from Other Activities 2010 - - - 26,906 26,906 - - 26,906 27,364

Total from Other Activities 2009 - - - 27,364 27,364 - - 27,364

Page 22

AYRSHIRE HOUSING



5. Profit on Disposal of Fixed Assets

2010 2009

£ £

Proceeds from sale of fixed assets - 170,991

Less: Cost of Sales

Value of property - 70,886

HAG received - -

HAG repaid - -

Legal and valuation costs - 609

- 71,495

- 99,496

6. Directors Emoluments

The directors are defined as the members of the Trustees, the Chief Executive Officer and any other person reporting

directly to the directors or the Trustees whose total emoluments exceed £60,000 per year.

2010 2009

£ £

Total Emoluments (including pension contributions

and benefits in kind) 64,316 63,262

Total Emoluments (excluding pension contributions)

to the highest paid director amounted to 55,135 54,240

Total expenses reimbursed to the Committee in so far as not

chargeable to United Kingdom income tax 278 178

None of the Trustees received any remuneration during the year.

2010 2009

£ £

7. Employee Information

The monthly average number of full time equivalent employees (excluding

Executive Trustees) during the year was :-

21

21

Wages and Salaries 579,638 581,088

Social Security Costs 45,768 44,983

Pension Contributions 80,001 82,472

705,407 708,543

8. Interest Receivable and Other Income

Bank Interest Receivable 6,735 73,920

9. Interest Payable and Similar Charges

Loan Interest 709,027 1,225,446

Interest Capitalised on Housing Properties ( 70,574) ( 81,305)

638,453 1,144,141

Page 23

AYRSHIRE HOUSING



10. Operating Surplus

Operating surplus is stated after charging/(crediting):-

Depreciation - Property 470,000 375,000

- Other Assets 33,675 42,383

Auditor’s Remuneration 6,362 6,672

Leasing 9,266 9,156

Bad Debts 24,247 31,805

11. Taxation

The organisation was granted charitable status on 5th May 1998 and as such is no longer subject to taxation.

12. Tangible Fixed Assets - Housing Properties

Heritable

Housing

Prop. Held

For Letting

Rented

Accommod.

Under

Construction

Shared

Ownership

Held For

Letting

Total

£ £ £ £

Cost/Valuation

At 01.04.09 36,093,893 17,404,875 483,485 53,982,253

Additions 755,509 8,048,250 - 8,803,759

Transfer on completion 25,155,563 ( 25,155,563) - -

Transfer on revaluation ( 23,654,965) - ( 3,485) ( 23,658,450)

At 31.03.10 38,350,000 297,562 480,000 39,127,562

Grants

At 01.04.09 5,761,761 13,764,839 - 19,526,600

Received 487,696 2,437,796 - 2,925,492

Transfer on completion 16,146,485 ( 16,146,485) - -

Transfer on revaluation ( 22,395,942) - - ( 22,395,942)

At 31.03.10 - 56,150 - 56,150

Other Grants

At 01.04.09 - 488,642 - 488,642

Received in year - 21,724 - 21,724

Transfer on completion 510,366 ( 510,366) - -

Transfer on revaluation ( 510,366) - - ( 510,366)

At 31.03.10 - - - -

Depreciation

At 01.04.09 726,464 - 13,536 740,000

Charge for Year 463,232 - 6,768 470,000

Transfer on revaluation ( 1,189,696) - ( 20,304) ( 1,210,000)

At 31.03.10 - - - -

Net book value at 31.03.10 38,350,000 241,412 480,000 39,071,412

Net book value at 31.03.09 29,605,668 3,151,394 469,949 33,227,011

Development Administration cost capitalised amounted to £93,675 (2009 - £163,386) for which grants of £62,983 (2009

- £5,953) were received in the year. Interest capitalised in the year amounted to £70,574 (2009 - £81,305).

Completed housing properties were revalued on the basis of existing use value for social housing at 30th

July 2010 by

DTZ, Chartered Surveyors. The valuation report has been made in accordance with the RICS Appraisal and Valuation

Manual. The Trustees do not believe that the values would have been materially different at the balance sheet date.

All housing properties are freehold.

Page 24

AYRSHIRE HOUSING



12. Tangible Fixed Assets - Housing Properties/Cont…

2010 2009

Cost of Properties 85,735,250 76,931,492

Less: Social Housing and Other Grants 52,785,532 49,860,040

32,949,718 27,071,452

Less: Depreciation ( 2,155,929) ( 1,733,211 )

30,793,789 25,338,241

13. Tangible Fixed Assets - Other Fixed Assets

Office

Premises

Fixtures

and

Fittings

Computer

Equipment

Let

Properties

Furniture

& Fittings

Total

£ £ £ £ £

Cost

As at 01.04.09 264,796 99,059 198,443 136,305 698,603

Additions 1,728 - 13,622 4,362 19,712

As at 31.03.10 266,524 99,059 212,065 140,667 718,315

Depreciation

As at 01.04.09 30,422 93,528 152,757 131,419 408,126

Charge for Year 5,364 1,473 22,165 4,673 33,675

As at 31.03.10 35,,786 95,001 174,922 136,092 441,801

Net Book Value as at 31.03.10 230,738 4,058 37,143 4,575 276,514

Net Book Value as at 01.04.09 234,374 5,531 45,686 4,886 290,477

14. Investment

Ayrshire Housing holds the one issued share of Ayrshire Homestake Limited, a company registered in Scotland.

The principal activity of Ayrshire Homestake Limited is the administration of the new supply of shared equity

properties.

2010 2009

£ £

15. Debtors

Rental Debtors 195,000 172,580

Provision for Doubtful Debts ( 10,000) ( 10,000)

Other Debtors 725,654 3,851,855

910,654 4,014,435

Page 25

AYRSHIRE HOUSING



16. Creditors due within one year

2010 2009

£ £

Housing Loans 855,645 673,540

Trade Creditors 108,714 175,102

Development Creditors 712,179 602,649

Other Taxes and Social Security 22,787 24,581

Accruals 78,726 79,171

Development Overdrafts 4,016,389 2,854,976

Prepaid Rents 188,981 181,778

5,983,421 4,591,797

Creditors due within one year include development guarantees totalling £4,016,389 (2009 - £2,854,976) for which

agreement in principal has been received for conversion into long term finance.

2010 2009

£ £

17. Creditors due after more than one year

Loans 24,094,273 22,993,371

Loans are secured by specific charges on the Company’s properties and are repayable at rates of interest ranging from

1.01% to 6.50% (2009 – 1.250% to 6.5%) which will mature over a period of 14 to 29 years as follows:-

2010 2009

£ £

Between one and two years 868,590 790,976

Between two and five years 1,785,683 1,624,142

In five years or more 21,440,000 20,578,253

24,094,273 22,993,371

18. Designated Reserves

Major

Repair

Reserve

£

Balance at 01.04.09 400,000

Transfers from Income & Expenditure Account 225,000

Balance at 31.03.10 625,000

19. Revaluation Reserve

2010 2009

£ £

Balance at 01.04.09 6,170,360 6,224,743

Transfer on Disposal of Properties - ( 16,678 )

Depreciation Adjustment ( 47,282) ( 37,725 )

Transfer on Revaluation of Properties 457,858 -

Balance at 31.03.10 6,580,936 6,170,360

Page 26

AYRSHIRE HOUSING



20. Pensions

The Company is a member of two pension funds in order to provide benefits for its employees.

Firstly, the Company is a member of the Strathclyde Pension Fund administered by Glasgow Council, a defined benefit

scheme, which is externally funded and contracted out of the State Earnings-Related Pension Scheme. The assets of the

scheme are held in a separate trustee-administered fund. The pension costs are assessed with the advice of independent

qualified actuaries, using the projected unit method.

The assumptions and other data that have the most significant effect on the determination of the contribution levels of the

scheme were taken at the last actuarial date of 31st March 2010.

2010 2009

Last actuarial date 31st March 2010 31st March 2009

Inflation/Pension Increase Rate 3.8% 3.1%

Salary scale increase per annum 5.3% 4.6%

Discount rate 5.5% 6.9%

Expected return on assets 7.2% 6.5%

The Organisation’s expected rate of return and share of assets in the scheme were :-

2010 2009

Equities 7.8% 7.0%

Bonds 5.0% 5.4%

Property 5.8% 4.9%

Cash 4.8% 4.0%

2010 2009 £ £

Estimated employer asset share 641,000 436,000

Present value of scheme liabilities 992,000 459,000

Present value of unfunded liabilities - -

Total value of liabilities 992,000 459,000

Net Pension Liability 351,000 23,000

Analysis of amount charged to operating profit 2010 £

Service costs 15,000

Past service costs 6,000

Curtailment and settlements -

Decrease in irrecoverable surplus -

Total operating charge 21,000

Analysis of amount credited to other finance income 2010 £

Expected return on employers assets 29,000

Interest on pension scheme liabilities (33,000)

Net return (4,000)

Net revenue account cost 25,000

Page 27

AYRSHIRE HOUSING



20. Pensions/Cont…

Analysis of recognised in Statement of Total Recognised Gains and Losses (STRGL)

2010 £

Actual return less expected return on pension scheme assets 140,000

Experience gains and losses arising on the scheme

liabilities

-

Changes in financial assumptions underlying the present

value of the scheme liabilities

(470,000)

Actual gain/(loss) in pension plan (330,000)

Increase in irrecoverable surplus from the membership fall

and other factors

2,000

Actuarial loss recognised in STRGL (328,000)

Movement in surplus during the year 2010 £

Deficit at 1st April 2009 23,000

Current service cost 15,000

Employers contributions (27,000)

Past service costs 6,000

Estimated benefits paid -

Net returns on assets 4,000

Actuarial (loss) 330,000

Deficit at 31st March 2010 (351,000)

History of Experience Gains and Losses 2010 £

Fair value of employer assets 641,000

Present value of defined benefit obligation 992,000

Surplus/(Deficit) (351,000)

Experience gains/(losses) on assets 140,000

Experience gains/(losses) on liabilities -

Secondly, the Company participates in the SFHA Pension Scheme. The SFHA Pension Scheme is a multi-employer

defined benefit scheme. The scheme is funded and is contracted out of the state scheme.

It is not possible in the normal course of events to identify the share of underlying assets and liabilities belonging to

individual participating employers. SFHA is a multi-employer scheme where the scheme assets are co-mingled for

investment purposes, benefits are paid from the total scheme assets, and the contribution rate for all employers is set by

reference to the overall financial position of the scheme rather than by reference to individual employer experience.

Accordingly, due to the nature of the scheme, the accounting charge for the period under FRS17 represents the employer

contribution payable.

The Trustee commissions an actuarial valuation of the scheme every three years. The main purpose of the valuation is to

determine the financial position of the scheme in order to determine the level of future contributions required so that the

scheme can meet its pension obligations as they fall due.

The last formal valuation of the scheme was performed as at 30th September 2006 by a professionally qualified actuary

using the “projected unit credit” method. The market value of the scheme’s assets at the valuation date was £268million.

The valuation revealed a shortfall of assets compared with the value of liabilities of £54 million, equivalent to a past

service funding level of 83.4%.

Page 28

AYRSHIRE HOUSING



20. Pensions/Cont…

The Scheme Actuary has prepared an actuarial report that provides an approximate update on the funding position of the

scheme as at 30th

September 2008. Such a report is required by legislation for years in which a full actuarial valuation is

not carried out. The funding update revealed a decrease in the assets of the scheme to £265 million and indicated an

increase in the shortfall of assets compared to liabilities to approximately £149 million, equivalent to a past service

funding level of 63.9%. The current triennial formal valuation of the scheme as at 30th

September 2009 is being

undertaken by a qualified actuary. The results of the valuation will be available in Autumn 2010.

Following a change in legislation in September 2005 there is a potential debt on the employer that could be levied by the

Trustee of the Scheme. The debt is due in the event of the employer ceasing to participate in the Scheme or the Scheme

winding up. The debt for the scheme as a whole is calculated by comparing the liabilities for the Scheme (calculated on a

buyout basis i.e. the cost of securing benefits by purchasing annuity policies from an insurer, plus an allowance for

expenses) with the assets of the Scheme. If the liabilities exceed assets there is a buy-out debt.

The leaving employer’s share of the buy-out debt is the proportion of the scheme’s liability attributable to employment

with the leaving employer compared to the total amount of the scheme’s liabilities (relating to employment with all the

currently participating employers). The leaving employer’s debt therefore includes a share of any ‘orphan’ liabilities in

respect of previously participating employers. The amount of the debt therefore depends on many factors including total

scheme liabilities, scheme investment performances, the liabilities in respect of current and former employees of the

employer, financial conditions at the time of the cessation event and the insurance buy-out market. The amounts of debt

can therefore be volatile over time.

The Company has been notified by the Pensions Trust of the estimated employer debt on withdrawal from the SFHA

scheme based on the financial position of the scheme as at 30th

September 2009. As of that date the estimated employer

debt for the Company was £693,232.

The current triennial formal valuation of the Scheme, as at 30th

September 2009, is being undertaken by a professionally

qualified actuary. The provisional results of this valuation were issued by the SFHA Pension Scheme in May 2010.

These figures show that the deficit on the scheme has increased from £53.6million to £160million. The funding level of

liabilities, based on these figures, would be 68.4% (2006 – 83.4%).

As a result of this valuation the total contribution rate must increase on average by 7% of pensionable earnings for all

existing benefit option structures from April 2011.

The total pension cost for the Company was £45,419 (2009: £41,544) of which £6,819 (2009: £4,571) was unpaid and is

included in creditors.

21. Revenue Reserves

2010 2009

£ £

Balance at 01.04.09 5,813,895 4,913,813

Surplus for the year 1,609,107 900,082

Transfer to designated reserves ( 225,000) -

Transfer to revaluation reserve ( 457,858) -

Balance at 31.03.10 6,740,144 5,813,895

22. Related Parties

Some members of the Trustees are tenants of the Company. Their transactions with the Company are all done on

standard terms, as applicable to all tenants and they cannot use their position to their advantage.

Three Trustees are Councillors with South Ayrshire Council. Any transactions with the Council are made at arms length,

on normal commercial terms and the said Trustees cannot use their position to their advantage.

During the period five tenants of the Company acted as Trustees. In total they paid rent of £15,487 (2009 - £13,627),

which is at arm’s length.

Page 29

AYRSHIRE HOUSING



23. Financial Commitments

At 31st March 2010 the amounts due in future years under operating leases were as follows :-

£ £

Expiring within one year 8,259 8,127

Expiring between one and two years 8,259 8,259

Expiring between two and five years 8,259 14,945

24,777 31,331

24. Housing Stock 2010 2009

The number of units of accommodation in management at the period

end was :-

General Needs 1,404 1,234

Shared Ownership 17 17

1,421 1,251

25. Capital Commitments

2010 2009

£ £

Expenditure authorised and contracted 141,590 7,921,874

The Board of Management expect that expenditure they have authorised to be fully funded by the Scottish

Housing Regulator, Local Authorities, banks and building societies.

Expenditure not yet contracted, on a scheme by scheme basis, is subject to formal Trustee approval procedures.

26. Contingent Liabilities

At 31st March 2010, the Company had £Nil contingent liabilities (2009 - £Nil).

27. Group Structure

Ayrshire Housing is a housing company registered in Scotland and forms part of a group. The other member is

Ayrshire Homestake Limited and the company is registered in Scotland. The main activity of Ayrshire Homestake

Limited is the administration of the supply of low cost home ownership. Ayrshire Housing is considered to be the

ultimate parent. Separate group accounts are not prepared as the Trustees are of the opinion that the group is

exempt from this requirement.

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